State receives notices of interest in Bristol Bay exploration licenses

Kristen Nelson

Petroleum News editor-in-chief

The Alaska Division of Oil and Gas received two expressions of interest in its exploration license offering in the Bristol Bay region, Jim Hansen, the division’s leasing manager, told Petroleum News Aug. 28. Because of the competitive nature of the exploration license bid process, the names are not being released.

Companies had 30 days, until Aug. 25, to notify the division of intent to submit a proposal. They now have 30 days, until Sept. 23, to submit the proposal.

The division will then go out with a public notice and also solicit for competing proposals, Hansen said. Once again companies will have 30 days to notify the division of intent to submit a proposal and another 30 days to submit the actual proposal.

“By the end of November we will know for sure how many applicants we have,” Hansen said.

Proposals are limited to 500,000 acres and the entire area is some 3 million acres, so the state “could get two proposals that do not overlap, in which case there could be two licenses issued,” he said.

“But the most likely scenario is that there will be overlap (in the proposals) and the division will then define the area.”

Once companies have seen the area outlined and know what mitigation measures will be required, they can then submit a final bid. Bids for exploration licenses are work commitments: the company does not pay the state up front, but commits to spend a specific amount of money to accomplish exploration work.

Extension of Bristol Bay basin

“Up to 6,500 feet of Tertiary strata may be present, some of which may possess very good reservoir qualities,” the state said, and characterized the area as having a moderate to high likelihood of hydrocarbons, “largely in the form of both conventional and unconventional gas accumulations.”

Hansen told Petroleum News in July that the division had already begun work on best interest findings, a necessary step for both an exploration license and for an areawide lease sale, which the division would like to schedule for 2005 in the southern portion of the basin, along the Alaska Peninsula.